It might sound like the legal market that today’s trainees will inherit as partners in years to come, but those are the figures that add up when these firms’ current European networks are taken into account.
With networks, national firms have found they can leapfrog City rivals with their own European offices, only without the hassle and expense of launching on the continent.
For some, a network of relationship firms is invaluable. Emilio Cuatrecasas, chairman of Herbert Smith’s Spanish best friend Cuatrecasas, told The Lawyer: “Networks aren’t just a convenience, they’re a necessity. No international firm can grow without forming part of a network.”
European alliances are coming back into fashion. UK firms that already have networks are seeking to extend their reach into Europe and those that have not are launching them.
Nabarro took inspiration from Slaughter and May when it expanded its best friends to include Spain’s Rodés & Sala Abogados and 13-partner Italian firm Nunziante Magrone, while CMS Cameron McKenna is busy expanding its network into Lebanon and deepening ties with alliance firms.
The two models of Nabarro and CMS are at different points in the spectrum of European alliances. The CMS alliance is at one end, where there are the deeply integrated firms that do pretty much everything with their overseas colleagues except share profits. At the other end there are those firms that have non-exclusive friendships with European practices. Berwin Leighton Paisner (BLP) and Addleshaw Goddard are examples, with the latter counting European powerhouses Garrigues and Gianni Origoni Grippo & Partners in Italy among its friends. The relationships are cordial but the level of integration goes no further than that.
The huge differences in culture and size between law firms make it impossible to say where the best place is to be on the sliding scale. But it is possible to take away some essential principles by looking at how firms handle the key factors of branding, secondment programmes and client referrals. Whatever the model, smooth client service is the goal and a night out in Milan the icing on the cake.
It might seem superficial, but the use of branding in business development is central to how an alliance works. Without the appearance of unity, few clients are going to believe that a network can handle a cross-border transaction smoothly.
But joint branding can be a real sticking point for European firms who are keen to keep their identity in their home markets. CMS Cameron McKenna, for example, hit real problems when it tried to unite its allies under the CMS brand. In the end it backed down, thinking it wise to let the European firms make their own decisions on branding in the interests of keeping the peace.
Field Fisher Waterhouse‘s (FFW) Italian ally La Scala e Associati uses different coloured marketing materials for domestic use. CMS and Eversheds have found that network firms want to keep their names in domestic markets, but are not averse to joint colour branding. The European firms linked with Nabarro and Pinsent Masons have kept all of their branding intact, but the network is jointly marketed in pitches and on the internet with special websites.
If you do have uniform branding on the alliance letterhead, make sure you follow up with integrated service. Mark Abell, head of FFW’s international operations, comments: “Many firms want to join an alliance just to put something on the letterhead, but those that do, engage in a dangerous game. Clients soon pick up on it if the approach isn’t integrated. Back in the 1980s and 1990s you could have probably got away with it, but not any more.”
Client management and referrals
UK firms hook up with continental colleagues to ensure that they can stick close to big clients, do business abroad and not lose out to international competitors. The network can only be called a success when clients fail to notice any gaps in service and are treated as if they are dealing with a firm with its own offices.
Eversheds International was really just a loose affiliation of firms, and UK partners often grew frustrated when trying to get their overseas colleagues into action. That all changed when Eversheds scored Tyco as a client. The deal, which involved Eversheds servicing Tyco’s needs across Europe, the Middle East and Asia, forced Eversheds into integration. When a client is barking instructions down the phone, it tends to bring things into focus. Eversheds’ relationship with Tyco and with its allies has been harmonised to such an extent that it sometimes feels as if Tyco general counsel Trevor Faure is running Eversheds International.
Even Addleshaw Goddard, which only has loose relationships with European players such as NCTM in Italy and Garrigues in Spain, offers a joint-billing service if clients demand it. Meanwhile, the CMS network has its own conflicts-checking process to keep its pool of clients sweet.
Stephen Houston, international partner at Addleshaw Goddard, says: “Firms have got to jump when the clients jump, like our own offices in the UK. We don’t think you need to be financially integrated to offer that service. The clients are just after the service and they’re not interested in whether you share profits or not.”
Because of London’s dominance of the European financial sector, most UK law firms are not likely to get much work flowing back to them from alliance partners.
Houston adds: “Getting work back is always secondary for us, but obviously you do hope to get work referred back.”
The Europeans certainly do benefit. Around 20 per cent of the revenues at Italian firm Piergrossi Bianchini Eversheds and German firm Heisse Kursawe Eversheds come directly from Eversheds International, while Polish firm Wierzbowski Eversheds, which is just one year into its association, is already thankful for 15 per cent of its revenue.
Tony Bunch, chairman of the Pinsent Masons Luther Group (PMLG) network, said having a European reach has helped the firm keep hold of clients that might have gone elsewhere.
The firm has been able to support construction supplies provider SIG as it embarks on an acquisition spree on the Continent, for example.
“It’s very difficult to put a financial value on [assisting clients oversees], but there’s a significant indirect benefit,” comments Bunch. “It’s essential for a firm like us to have a European offering.”
To find more clients such as SIG, the PMLG firms are individually going through their existing rosters and approaching takers for international work. The backroom systems are not yet integrated into the network firms, but Bunch wants to first focus on developing the client-facing parts of the business, such as the website and marketing materials.
Level of integration
Judging how deep to get into a relationship is as difficult for law firms as anyone else. A regular fling or two with some independents might bring more freedom of choice for UK firms, but they pay a price in terms of fewer referrals coming back to them and the lack of integrated systems such as IT and documentation.
Addleshaws’ Houston comments: “Choice is key to our offering. But there are some process issues and that’s where global firms might be able to do things better. Behind the scenes it can sometimes be a bit more difficult for us.”
Indeed, FFW scrapped its alliance to merge with choice bits of its former allies last year. While this may seem a typical example of colonialist UK firms at their worst, many European lawyers welcome the professionalism and systems that UK firms can bring to the party. Many European firms are still dominated by their founding fathers, so the opportunity to join a truly meritocratic organisation can be a real attraction. And if they can still remain semi-independent, so much the better.